We have been keeping a close eye on the reaction of AIM companies to the increasing ESG demands of customers and investors.

This week brought news of initiatives from two AIM companies which highlight the growing focus on ESG from the AIM community.

Science in Sport (LON: SIS), the premium performance nutrition company serving elite athletes, sports enthusiasts and the gym lifestyle community, announced its first major launch of an environment-friendly pack.

Science in Sport has invested in packaging technology and plan to convert the bulk of its protein powder range into recyclable pouch packaging, this being a first for the sports nutrition industry globally.

The PhD Nutrition pouch range will move to recyclable material, with a full range change completed in early 2021. In the last 12 months, PhD Nutrition has filled 700,000 pouches which have ultimately gone to landfill.

We commend the initiative of this small AIM company but also find it somewhat worrying that PhD will be the first sports nutrition brand in the world with packaging which can be recycled. Furthermore, this approach will only be rolled out to the Science in Sport brand later in 2021.

The new pouch is the first step in the Company’s strategy to minimise waste and the negative impact on the environment. Initiatives to support the recycling of gel and bar packaging are expected to commence in 2021.

We have never been tempted to invest in Science in Sport, which has been unable to make a profit for many years, and the shares continue to languish 45% below the June 2013 AIM listing price. However, it’s a credit that a small struggling AIM company has taken the initiative on this matter, although not before time given all the discarded SiS pouches one comes across!

Stephen Moon, Science in Sport’s Chief Executive Officer, commented:
“We take our ESG strategy very seriously and are in the process of introducing wide-ranging measures aimed at reducing the environmental impact our manufacturing footprint, brands and products have on our planet. The introduction of a recyclable pouch is the first of several initiatives over the short and medium-term.”

We hope they are rewarded for this initiative, as shareholders could also do with some encouragement.

Inspecs Group (LON:SPEC), the designer, manufacturer and distributor of eyewear frames, a relatively new addition to AIM in February this year announced news of a new ‘house brand’, made from fully sustainable and recycled materials.

The new brand is due to be launched in 2021 and is in line with its continued ESG improvement policy. This is another great initiative which we hope will go down well with customers, however, it would be helpful if Inspecs could elaborate on the ESG improvement policy referred somewhere on its website.

ESG investing is an undeniable and perpetual growth story which is not slowing down and is expected to be a significant part of financial advice in the future.

How does AIM perform against ESG principles and what opportunities in ESG does AIM have to offer?

Please try and join us at 2pm on 24 November for our webinar, ‘ESG & AIM – do they mix?’  You can register through the link here

London’s AIM market has performed strongly over the pandemic, materially outperforming the main UK stock market, which has now been the case for several years.

In this interview with Jeremy Naylor of IG markets, Chris Boxall, co-founder of specialist investment manager Fundamental Asset Management, discusses the performance of several companies whose shares have soared over recent months, and asks where they could go from here given the elevated valuations.

He also considers the unusual ’investing’ environment, where profit and return now appear to be of secondary importance to many investors as they seek out the next great idea.

Companies covered in the interview include:
Abcam (ABC)* 2 minutes 10 seconds
Codemasters (CDM)* 3:38
GB Group (GBG) 5:56
GlobalData (DATA) 8:21
Fairy tale valuation methodology and concept investing 10:30
D4t4 Solutions (D4T4) 11:56
Watkin Jones (WJG)* 14:26
Elixir International (ELIX)* 18:21

* Existing Fundamental portfolio holdings

You can find out more about Fundamental’s AIM portfolio service, including the latest fact sheets, from the link here.

Fundamental Asset Management has delivered exceptional investment returns for more than 16 years.

Many are attracted to invest in AIM for the Inheritance Tax planning attractions yet are fearful of the perceived extra risk of investing in smaller quoted companies and the notion that they will have their money locked up in early stage businesses.

While the vast majority of AIM companies are smaller than their peers on the main market, there are now many large companies on AIM, with nineteen valued at more than £1 billion each at the end of October. AIM’s largest company ASOS, which is valued at more than £4 billion, would gain it entry to the FTSE100 index of the UK’s largest companies.

Our philosophy for investing in AIM for Inheritance Tax planning purposes is to stick to well-established, proven and profitable businesses, many of which are often run by their founders who continue to own significant equity stakes. Our AIM for Inheritance Tax portfolios include several companies that have been controlled by the same founding families for several generations.

In eschewing small, early stage ventures, with unproven business models and negligible revenue, we may miss out on the occasional star performer, however, experience has also shown that we also avoid the numerous failures.

Investing in early stage companies requires a large degree of patience. New concepts and technologies take many years, and often decades, to come to commercial fruition. AIM previously attracted many small early stage business, often in the healthcare sector, some of which have seen great success over the pandemic. Rather than raise new capital via a listing on AIM, early stage companies now have access to start-up capital through venture capital, private equity or crowd funding routes. This means that new arrivals to AIM in recent years have largely been better-established businesses, the majority of which are revenue generating and profitable.

The primary attraction for those investing in AIM for Inheritance Tax planning purposes is often the short 2 year qualifying period for assets to fall outside the estate, following the Business Relief rules. Accordingly, while investing in equities should always be viewed as a long-term exercise (5 year plus), the window of investment opportunity for Inheritance Tax planning is somewhat shorter than would normally be the case.

Our webinar ‘The truth about risk in AIM’, highlights the more pertinent risks associated with investing in AIM for Inheritance Tax planning purposes. You can watch the webinar from the link here.

Chris Boxall

Cofounder & Co-Managing Director

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 16 years, from the link here.